Free Samples

Oman
Mining & Environmental Law & Regulations

Population, mn:4.5

GDP, US$bn:74.0

GDP per capita, US$:16,731.2

Inflation, CPI ave:1.1

Budget Balance, % of GDP:-18.6

FX, LCY/US$:0.4

Mining GVA, US$bn:34.4

Regulatory Risk Rating

33

0

100

Score: 33

Severe Risk

But for the award of 10 points for having a modern code, the law is similar in ranking to Qatar; it is considerably more sophisticated than Qatar, but its score in each category is almost universally "inadequate" as a result of the inherent discretion found in virtually all aspects of the development process. The 2013 amendments to the law, which restrict foreign ownership in mineral projects to a 30% stake and introduce the concept of forced local partnerships, signals either disinterest in foreign investment or a level of naivety that is quite astounding.

Corruption Risk Index

Regulatory Risk Rating

Oman, officially known as the Sultanate of Oman, is an Arab country in the southeastern coast of the Arabian Peninsula. It is bordered by the United Arab Emirates to the northwest, Saudi Arabia to the west, and Yemen to the southwest. It also shares marine borders with Iran and Pakistan. The coast is formed by the Arabian Sea on the southeast and the Gulf of Oman on the northeast. Oman is a peaceful, high-income and relatively progressive, absolute monarchy. Oman has substantial mineral resources, though modest in comparison with Saudi Arabia. They include chromite, copper, dolomite, manganese, coal, zinc, limestone, marble, gypsum, silicon, gold, cobalt and iron. Among the metallic resources there exist chromite, manganese, copper and iron ore mines.

PRINCIPAL LEGISLATION AND REGULATOR

The Omani mineral sector is primarily regulated by the Mining Law (Royal Decree No. 27 of 2003 (as amended)), together with its associated Executive Regulations (No. 77/2010) (ER 77). Article 2 indicates that the state owns all minerals in their natural state within Oman. The Ministry of Trade and Industry administers the law and, in particular, the Directorate General of Minerals (DGM) is responsible for overseeing mining operations and handling all permit and licence applications. In 2013, the government issued Ministerial Decision No. 39 of 2013, which gave priority of grants to national companies, and adopted measures to restrict foreign investment in the mining sector to 30% interests in mineral licence holding companies. As in Saudi Arabia, therefore, corporate joint ventures ought to be considered as a method to enter the mining sector.

GRANT AND FORMS OF MINERAL TITLE

Oman provides four basic forms of mineral title (which roughly equate to a reconnaissance licence, exploration licence, mining right and mining concession). They can be more particularly described as follows:

Exploration Licence (Reconnaissance): an applicant for an exploration licence must provide a proposal for work, a budget and an undertaking to spend the budgeted sums; the Directorate must study the application and make a decision within 30 days. There is full discretion to grant or deny the application (Arts. 17 to 19). An exploration licence may not be granted over an area that is the subject of an existing concession area or mining licence (Arts. 13 and 24). The duration is one year and it is renewable for similar periods.

Prospecting Licence: virtually all of the terms and conditions pertaining to the exploration licence also apply to a prospecting licence, including duration.

Mining Licence: The decision to award a mining licence is, ultimately, discretionary. The key criteria for a mining licence are: (1) a geological study (Art. 29.4); (2) technical competence (Art. 29.6); (3) a work program and budget (Arts. 29.5 and 29.7); and (4) satisfaction of such conditions as may be specified by the Ministry of Environment (i.e., an EIA or whatever else may be required).

Mining Concession: For a mining concession, the key criteria are the same as a mining licence Art. 48), except that the Directorate is required to consider if the deposit is sufficient to merit long-term commercial exploitation; the operation to be conducted must be in keeping with the "most ideal" norms of mining standards. (Art. 49). In addition, where applicable, an agreement with the surface rights owner may be necessary (Art. 69). The duration of a mining concession will be 25 years.

Transfers are only permitted on consent of the Minister (Art. 19). A mining licence and concession holder must appoint and train Omanis according to the conditions specified in the licence and inform the Director in advance of any intentions to perform or cease any relevant activity of the licenced operations.

DEVELOPMENT CONSIDERATIONS

The Executive Regulations indicate that the applicant for a mining concession must produce a program for rehabilitating the land, including designs illustrating the site after rehabilitation and the location of all dumps, to ensure no impact on water resources (Art. 52.16). Pursuant to Articles 9 and 16 of the Law on Conservation of the Environment and Prevention of Pollution, an environment permit is required for any work that may cause damage to the environment and an environmental impact assessment study (EIA) must form part of the application. Given that Article 21 of the environmental law requires a permit for cutting down any tree, removing any stone or damaging any grasslands, it is quite certain that virtually any activity in the exploration, development and production phase of a mining project will necessitate a permit. This is reaffirmed in the MECA Guidelines for Obtaining Environmental Permits, which indicates that an EIA is required for Large Projects including quarries, mines and smelters, as well as projects requiring water treatment. The permit is only issued for a two-year period initially, though other periods may be granted on renewal.

Oman, officially known as the Sultanate of Oman, is an Arab country in the southeastern coast of the Arabian Peninsula. It is bordered by the United Arab Emirates to the northwest, Saudi Arabia to the west, and Yemen to the southwest. It also shares marine borders with Iran and Pakistan. The coast is formed by the Arabian Sea on the southeast and the Gulf of Oman on the northeast. Environmental problems currently faced by Oman, include high levels of soil and water salinity in the coastal plains; a scarcity of water due to drought; seepage of industrial effluents into the water system; and desertification. Turtles are strictly protected in Oman, as are leopards. The Arabian tahr, a kind of mountain goat related to the ibex, which is unique to the country and some parts of the United Arab Emirates, is just coming back from the brink of extinction.

PRINCIPAL LEGISLATION AND REGULATOR

The principal law concerning the environment is the Law on Conservation of the Environment & Prevention of Pollution (Decree No. 114/2001) (“Law on CE&PP”). Article 6 indicates that “[t]he responsibility for conservation and preservation of the environment is the duty of all ….”. Additional legislation includes the Protection of Water Resources (Decree No. 29/2000), which regulates water permits, as well as the Issuance of Environmental Approvals and Final Environmental Permit Decree (No. 187/2001). The Ministry of Environment and the Ministry of Regional Municipalities and Water Resources are responsible for administering these laws.

EIA PROCESS AND OTHER PERMITS

Pursuant to Articles 9 and 16 of the Law on CE&PP, an environment permit is required for any work that may cause damage to the environment and an environmental impact assessment study (EIA) must form part of the application. Given that Article 21 requires a permit for cutting down any tree, removing any stone or damaging any grasslands, it is quite certain that virtually any activity in the exploration, development and production phase of a mining project will necessitate a permit. This is reaffirmed in the MECA Guidelines for Obtaining Environmental Permits, which indicates that an EIA is required for “Large Projects” including quarries, mines and smelters, as well as projects requiring water treatment.

By virtue of the Issuance of Environmental Approvals and Final Environmental Permit Decree, a preliminary environmental permit is obtained for the construction of a project and a final permit is given after completion of construction. A final permit is issued for a two-year period and may be renewed for a similar or other period of time (Art. 2). The decree divides projects into three categories. Quarries, mines and aluminium plants are regarded as Category Two projects. It is hard to conclude that Category Two projects are middle-of-the-road impact projects given that small poultry farms are found in Category One, yet projects involving (large) poultry farms, temporary workers’ camps, fish farming and electricity lines all fall into Category Three.

The Law on CE&PP indicates that no environmental permit may be given where the work would result in inevitable and incurable impacts on the environment (Art. 16) and requires an assessment to be made of the value of the benefits of the project as against the cost of the environmental impacts, in the evaluation process. A further water permit is necessary in order to discharge treated wastewater into the environment (Art. 20). According to the Law of Protection of Water Resources (PWR), any work that affects groundwater is prohibited and any work that would result in a change in the direction of a stream requires a water permit (Art. 5, PWR).